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Summer Sales Sluggish As Consumers Remain Cautious


How’s business?

Karen Austin, president, home electronics,
Sears Holdings:

Business is
about what we planned. There have not
been too many surprises so far.

Jeannette Howe, executive director,
Specialty Electronics Nationwide:

Business is up for most of our members.
That said, 2009 was a pretty horrible
year for many independents, so being
up is the only option if you want to stay
in the business. The dealers that have
survived are battle scarred and certainly
leaner, but they are savvier business
people too. The most successful dealers
have downsized and yet have been proactive
with their customer base.

The biggest challenge for many of
the specialty dealers is recognizing that
new construction is not going to bounce
back quickly and we are now in a retrofit world. For many dealers in the custom-
installation space, this transition
has been like starting an entirely new
company. Just running wires, like selling
TVs, is no longer a viable way to
keep a company afloat. We are encouraging
dealers to get into all aspects of
home automation and control.

One member in an affluent market
observed that customers used to come
in to see how much they could spend,
and now they come in to see how much
they can save. This more frugal mentality
is with us to stay and the independent
channel must respond accordingly.

David Pidgeon, president/CEO,

Business continues to be
challenging. While we have seen some
improvements, particularly in our largest
and smaller orders, they have been
off set by some disappointing results in
our midsize orders.

Jim Ristow, executive VP, Home Entertainment

It is a challenge,
but the group is faring better than the
overall market. Several of our suppliers
have reported that HES and [parent
buying group] BrandSource are continuing
to outpace the industry. This
speaks to the resiliency of the HES/
BrandSource members and our programs
that allow them to stay quite

Ross Rubin, industry analysis director,
The NPD Group:

We’re seeing evidence
of overall health. Year-over-year
comparisons in categories such as LCD
TV — particularly for smaller screens
— must be looked at in light of the analog
TV cutoff run last summer. Aggressive
plasma pricing is leading to
some of the strongest growth there
we’ve seen in a long time.

Similarly, after such strong growth in
notebooks, particularly netbooks last
year, growth this year is more modest.

Dan Schwab, co-president, D&H Distributing:

Business is strong, with various
categories still showing growth.
D&H experienced overall growth of 20
percent last fiscal year [ended April 30,
2010]. This included a 12 percent rise
in sales in the display category.

Other growth areas include notebooks
and LED/LCDs within the display category,
and we’ve also seen good performance
in areas like personal care and
housewares. Some categories, such as
gaming, were up at D&H even though
they were down in the industry in general,
so we’re proud of being able to pass
that success along to our dealers.

This year continues to be solid for us,
with sales still up around 20 percent
due to our investments in our customers.
That includes program enhancements
such as increasing the amount of
manufacturers and prizes involved in
our Incentive Rewards plan, additional
sales support, and so forth.

Fred Towns, sales and marketing senior
VP, New Age Electronics:

New Age
Electronics is eight months into fiscal
year 2010 and we are optimistic about
what the back-to-school lineup and holiday
selling season will hold for our retailers.
We are excited about the latest
consumer electronics and gaming products
this season has to offer, such as the
next-generation television from Sharp
that offers improved refresh rates, impressive
color palette and overall great HD picture quality.

Michael Vitelli, executive VP, president-
Americas, Best Buy:

This summer,
our customers are looking to find
the technology that helps them connect
with the services, information,
entertainment and people that matter
most to them. We recently launched
a store reset that included a focus on
IPTV connectivity solutions, mobile
broadband and home broadband. This
is a great opportunity for us to drive
incremental margin by attaching connections
to the millions of connectable
devices we sell.

Dave Workman, executive director/
COO, PRO Group:

Business has been
choppy since the first of the year. We
are seeing gains in the audio and mobile
categories but continue to struggle
with dollar gains in the TV category
based on the embedded ASP reductions
created from last year.

The comparisons in the category
should get easier in the second half, but
it remains to be seen if the consumer
will respond in greater numbers to price
points above $1,000. One thing which is
hampering this is the consumer’s reluctance
to take on new debt. The TV sale
has been historically one of the most
frequently financed sales — with this
reluctance it is holding back some of the
sales potential with these price points,
even though underwriting changes are
giving retailers a higher approval percentage
compared with last year.